Industry Review Vietnam of the First Quarter 2016

The production and sale of domestic steel products in the first 2 months of 2016 continued to maintain a solid growth rate despite competition from Chinese low-priced steel.

On March 22th, 2016, the Ministry of Industry and Trade decided to apply a temporary safeguard duty of 200 days for steel billets and long steel products, triggering domestic prices to soar. As a result, many agents purchased large volumes of steel for speculation. However, as some big steel manufacturers made a commitment to maintain their current prices, the cost of construction steel on the market gradually cooled down at the beginning of April. Resently, the selling price is around 11 - 11.3 million VND per ton.

Information Technology

The IT industry has become a fast growing, sustainable, and profitable sector with increasing export value. Even during the slow recovery of the world economy, many large corporations, such as Samsung, LG, and Panasonic are continuing to invest and expand production in Vietnam. According to the latest report from the Vietnam Software and IT Services Association (Vinasa), revenue from software and IT services in Vietnam has increased 50% in five years, from US$ 2 billion in 2010 to over US$ 3 billion in 2015.

In high-tech sector, the IT industry of Vietnam ranked in the top 10 leading countries in the Asia - Pacific region, and in the top 30 in the world on outsourcing and software development. Moreover, since 2012, Vietnam has become Japan’s second largest outsourcing partner.

Clean Food

Food quality is currently of one major concern in Vietnam. However, many foreign corporations perceive good opportunities to invest into manufacturing clean foods market. With an urban population of more than 20 million, in which the middle class and young families are increasing significantly, along with consumer attitudes and habits, Vietnam is definitely an attractive market for organic food.

Currently, Techna Group (France) – specialyzing in nutrient manufacturing for livestock and crops – is considering Vietnam as a strategic market for business expansion in ASEAN. CJ Cheil Jedang Co. (Korea) plans to invest US$ 500 million in Vietnam through direct investment or the acquisition of some food companies in Vietnam. This will increase their total investment capital in Vietnam to $US 900 million. Their goal is to make Vietnam become the second largest oversea production center (following China) of CJ Cheil Jedang. In addition, giants like Vingroup, Hoa Phat, Hoang Anh Gia Lai are investing heavily in agriculture, which could push the market to change dramatically in the future.

E-commerce

Total revenue of e-commerce activities in Vietnam is expected to reach over US$ 7.5 billion by 2019 (Kent Research). Recently, Alibaba Group Holding Ltd. made its largest oversea investment with a US$ 1 billion deal for control of Lazada Group SA. "This cooperation is in conformity with the company's vision of making E-commerce become more popular in Vietnam", Alexandre Dardy - CEO Lazada Vietnam

On the basis of promoting non-cash payment in Vietnam for the period of 2011-2015, the State Bank of Vietnam also implemented a plan to enhance payment services via point of sale systems (POS) from 2014 to 2015, gradually expanding payment via POS, and forcing POS to become a habit of the cardholder, which is one of the vital components for the development of E-commerce.